--- title: Tax Refund Season Is a Popular Time to Buy a Used Car — but Shoppers Will Have Trouble This Year description: The spring tax season is a popular time to buy a used car. But shoppers looking to buy cars with their tax refunds may have trouble in 2023. authors: - name: Pete Grieve role: Lead News Reporter url: https://money.com/author/pete-grieve/ bio: Pete Grieve is a personal finance reporter. In his time at Money, Pete has covered everything from car buying to credit cards to the housing market. education: University of Chicago, BA Political Science at_money_since: 2022 articles: 602 covers: - Shopping - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Taxes social: - https://twitter.com/pete_grieve - https://linkedin.com/in/pete-grieve-b5aa02138 - https://www.facebook.com/petegrieve4 editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Shopping - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2023-03-23T18:06:33.000Z' modified: '2024-01-10T17:52:35.000Z' section: Shopping tags: - cars - News word_count: 511 canonical: https://money.com/tax-refund-buy-used-car-trouble/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Buying used car with tax form in the background](https://img.money.com/2023/03/News-Tax-used-car.jpg) Tax season is usually a peak period for buying used cars, but Americans who want to go car shopping with their [refunds](https://money.com/wheres-my-refund/) will find it more difficult this year. Industry experts say the usual springtime bump in car buying could be smaller in 2023 because the average tax refund amount so far has been lower than it was last year, according to a [Kelley Blue Book report](https://www.kbb.com/car-news/average-used-car-price-fell-in-february/). Shoppers are also facing a tough market. The average [auto loan rate](https://money.com/best-auto-loan-rates/) for a used car purchase has moved into the double digits, while prices remain high and could rise again soon. ## What experts say Used car dealerships are already people shopping for vehicles and using their tax refunds to pay for them. But the [average refund amount](https://www.irs.gov/newsroom/filing-season-statistics-for-week-ending-march-10-2023) so far in 2023 has been $2,972, which is 11% less than last year. Buyers might not be happy with the selection of used cars available for sale either. In 2023, the IRS has [processed more tax refunds](https://money.com/irs-issuing-more-tax-refunds/) in the early part of the season. As taxpayers get money back, some are using it to buy cars, depleting inventory at dealerships. With refunds coming in earlier than they did last year, tax season car shopping has gotten off to a quicker start, according to Cox Automotive, the parent company of Kelley Blue Book. Given that used supply is low, the market looks competitive right now. - “Used-vehicle sales have been up significantly, causing inventory to fall quickly in recent weeks and leaving dealers with especially tight inventories for the tax refund and spring selling season,” Charlie Chesbrough, senior economist at Cox, said in the report. - Kelley Blue Book analysts say [used car prices](https://money.com/average-used-car-prices-down/) could be set to rise after new data showed that wholesale prices increased 1.8% in the first half of March. Those are the prices dealers pay at auction, and wholesale trends can indicate what’s next for retail prices - Used car buyers are in a nightmarish situation for getting loans. Edmunds says the average loan rate is 11.3%, up from 7.8% a year ago, while Cox reports that the [average used loan rate](https://www.coxautoinc.com/market-insights/fed-raises-effectively-doubling-down-on-credit-tightening/) is 14%. These rates will likely rise even more after the Fed announced a 25 basis point [interest rate hike](https://money.com/fed-interest-rate-hike-march-2023/) Wednesday, according to Cox. - As a result of higher loan rates, the average monthly payment for a used vehicle purchase increased slightly last month, rising from $546 in January to $551 in February, Edmunds reports. Meanwhile, the average price of a used car price *declined* by 1.7% in February, falling to $26,068, according to [Kelley Blue Book](https://www.kbb.com/car-news/average-used-car-price-fell-in-february/). ## Bottom line The used car market is getting especially competitive as people receive their tax refunds from the IRS. It could soon become even more difficult to afford a used car, as some experts are forecasting that higher loan rates and higher prices are coming. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/tax-refund-buy-used-car-trouble/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Shopping", "item": "https://money.com/shopping/" }, { "@type": "ListItem", "position": 3, "name": "Vehicles", "item": "https://money.com/vehicles/" }, { "@type": "ListItem", "position": 4, "name": "Tax Refund Season Is a Popular Time to Buy a Used Car — but Shoppers Will Have Trouble This Year" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/tax-refund-buy-used-car-trouble/#webpage", "url": "https://money.com/tax-refund-buy-used-car-trouble/", "name": "Tax Refund Season Is a Popular Time to Buy a Used Car — but Shoppers Will Have Trouble This Year", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2023-03-23T18:06:33.000Z", "mainEntity": { "@id": "https://money.com/tax-refund-buy-used-car-trouble/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/tax-refund-buy-used-car-trouble/#breadcrumb" }, "dateModified": "2024-01-10T17:52:35.000Z" }, { "@type": "NewsArticle", "headline": "Tax Refund Season Is a Popular Time to Buy a Used Car — but Shoppers Will Have Trouble This Year", "articleSection": "Shopping", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2023/03/News-Tax-used-car.jpg", "width": 2880, "height": 1920, "caption": "News-Tax-used-car" } ], "author": [ { "@type": "Person", "name": "Pete Grieve", "url": "https://money.com/author/pete-grieve/", "@id": "https://money.com/author/pete-grieve/#author", "description": "Pete Grieve is a personal finance reporter. 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